Meta Platforms: The Biggest Holding In EasyETFs AI World AMETF!

Meta Platforms is one of the largest holdings in the newly listed EasyETFs AI World Actively Managed ETF, managed by EAM (EasyAssetManagement). Commenting on the latest results, Shaun Krom, CIO (Chief Investment Officer) of EAM, shares below why they believe Meta could be positioned for future AI leadership.

As the portfolio manager of the EasyETFs AI World Actively Managed ETF, my goal is to ensure we track the most promising companies in the AI landscape, and Meta Platforms (META) stands out. With its Q3 earnings report, Meta has reaffirmed its position as a key player in AI and digital advertising, driven by robust revenue growth, a thriving ad ecosystem, and forward-looking investments in GenAI and Reality Labs. Let’s break down how Meta’s latest quarter shapes up for our AMETF’s strategy and the broader tech landscape.

Last week, Meta highlighted the surge in AI spending through its third-quarter earnings. The social media and tech giant’s capital expenditure rose 36% to $9.2 billion, with expectations of further increases next year. Additionally, Meta's AI head, Ahmad Al-Dahle, shared that Meta trained its Llama 4 model using over 100,000 Nvidia H100 chips.

 Here are some key points that highlight Meta’s advantage in the market:

• Data & Infrastructure: Meta leverages vast data and advanced infrastructure to drive personalized advertising.
• Generative AI: Empowers small businesses with AI-driven ad creation, boosting engagement.
• Resilient Model: Adaptability to market shifts strengthens Meta’s diverse advertiser base.
• Llama AI: Custom AI models reduce dependency and enhance platform applications.
• Innovative Ads: AI-driven, click-to-message ads open new revenue channels.
• Efficiency: Profitability supports AI investment without sacrifice.
• Enhanced Experience: AI features increase engagement and ad inventory.
• XR Potential: Generative AI may transform VR/AR user interfaces.
• Scale & Vision: Content aggregation and founder-led focus reinforce Meta's long-term AI edge.
  
  

Demand Dynamics: Solid Growth Across Markets

Meta’s Q3 beat revenue estimates by 0.7% and exceeded guidance by 2.1%, highlighting steady growth momentum. In its core Family of Apps (FOA), revenue outperformed expectations by 1.0%, underscoring Meta’s strong ad ecosystem. However, Reality Labs fell short by $42 million, reflecting the challenges of pioneering new tech categories like augmented reality.

Meta’s advertising engine continues to gain momentum, with a notable 11% year-over-year increase in price per ad impression. This gain, coupled with similar growth in total ad impressions, demonstrates that Meta’s push to monetize Reels is paying off. Key geographic regions, including the U.S. and Europe, showed a 21% year-over-year increase in ad revenue, a healthy sign of Meta’s global appeal. While markets in the rest of the world and Asia Pacific also grew, it’s noteworthy that Meta faces a high baseline for comparison due to last year’s surges from platforms like Shein and Temu.

Profitability: Rising Investments and Impressive Margins

Meta delivered on profits, surpassing EBIT estimates by 7.1%. Although operating expenses rose 14% year-over-year - largely due to R&D investments in GenAI infrastructure (good news for Nvidia) - the underlying profit metrics remained strong. The cost of revenue also rose by 19%, indicating Meta’s commitment to AI infrastructure. Despite these expenses, Meta posted an EPS that outpaced estimates by $0.78 and exceeded free cash flow estimates by $4 billion. The company’s CapEx came in lower than expected due to delayed server arrivals, reinforcing my focus on annualized free cash flow, which provides a steadier picture amid quarterly fluctuations.

Strong Balance Sheet and Revised Guidance

Meta’s robust balance sheet, with $70.9 billion in cash and equivalents, positions it well for the CapEx adjustments in the near term. With a $10.5 billion new debt offering, Meta is preparing for ambitious investment opportunities. Q4 revenue guidance beat by 0.6%, and with adjustments to both OpEx and CapEx guidance for the year, Meta is demonstrating prudent flexibility in spending.

AI & Ad Monetization: Unlocking Immediate and Future Potential

“We're seeing strong retention with advertisers using our generative AI-powered image expansion, background generation, and text generation tools, and they're already driving improved performance for advertisers even at this early stage,” said CFO Susan Li.

Meta’s AI strategy is twofold: Core AI, focusing on near-term engagement boosts, and longer-term innovations. Core AI has already made substantial impacts, driving an 8% engagement increase on Facebook and a 6% increase on Instagram. The next phase, set to enhance the video experience on Facebook, points to Meta’s iterative approach to leveraging GenAI for engagement and, ultimately, monetization.

The ability to process more data affordably, thanks to accelerated computing, means more relevant content and ads. This model improves targeting and conversion rates, making the ads more effective and profitable. In my view, the enhanced ad algorithms, including new targeting based on customer engagement timelines, give Meta a potent edge in maintaining advertiser retention.

Meta also saw early success with GenAI tools like background generation, text expansion, and image generation, which are pushing conversion rates up by 7% and driving a 22% return on ad spend for U.S. advertisers. The growing number of advertisers - currently over a million - using Meta’s GenAI tools indicates strong traction in the market.

Core AI and Reality Labs: The Next Frontier

Meta’s ambition with GenAI and Reality Labs illustrates its dedication to building the next computing platform. Early successes with Ray-Ban’s smart glasses show the potential for wearable tech to achieve mainstream adoption. While Meta’s GenAI and Reality Labs initiatives are costly today, they are visionary bets with the potential for significant long-term returns.

Notably, the Llama model, Meta’s open-source GenAI platform, is an innovative approach that invites global developers to enhance Meta’s ecosystem. The open-source model drives developer engagement, creating efficiencies that Meta can adopt for its own use, effectively turning external development into a competitive advantage.

Conclusion: A Bullish Take on Meta

This is an elite company with a clear vision of AI and engagement. For the EasyETFs AI World Actively Managed ETF, Meta remains a core holding, representing both short-term revenue growth and long-term potential in GenAI, ad monetization, and transformative digital experiences. Meta has proven time and again that it knows how to capture attention, and as it continues to invest heavily in the future, I’m excited to see how Meta’s AI journey evolves.

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